City of Benton Harbor v. Richardson, K 77-18 CA 8.

• Decision Date: 31 January 1977
• Docket Number: No. K 77-18 CA 8.,K 77-18 CA 8.
• Citation: 429 F. Supp. 1096
• Parties: CITY OF BENTON HARBOR, a Municipal Corporation, Plaintiff, v. Elliott L. RICHARDSON, Secretary of Commerce, and John W. Eden, Assistant Secretary of Commerce for Economic Development, United States of America, Defendants.
• Court: U.S. District Court — Western District of Michigan

429 F. Supp. 1096

CITY OF BENTON HARBOR, a Municipal Corporation, Plaintiff, v. Elliott L. RICHARDSON, Secretary of Commerce, and John W. Eden, Assistant Secretary of Commerce for Economic Development, United States of America, Defendants.

No. K 77-18 CA 8.

United States District Court, W. D. Michigan, S. D.

January 31, 1977.

COPYRIGHT MATERIAL OMITTED

Yvonne L. Hughes, Benton Harbor, Mich., for plaintiff.

John H. Bauckham, Kalamazoo, Mich., for intervening defendant.

Robert S. Fastov, Dept. of Commerce, Washington, D. C., Frank Spies, U. S. Atty., Grand Rapids, Mich., for defendants.

OPINION

MILES, District Judge.

This suit arises out of the administration of Title I (the Local Public Works Capital Development and Investment Act of 1976, 42 U.S.C.A. §§ 6701-6710 (Supp. 4, 1976)) of the Public Works Employment Act of 1976, 42 U.S.C.A. § 6701 et seq. (Supp. 4, 1976), Pub.L. No. 94-369, 90 Stat. 999. This legislation establishes a program of federal grants primarily for the construction, renovation, repair, or other improvement of local public works projects. See 42 U.S. C.A. § 6702. It authorized an appropriation of $2 billion ($2,000,000,000)¹ for these purposes (42 U.S.C.A. § 6710), to be allocated to projects according to a stated scheme. Seventy percent (70%) of this sum was to be directed to projects from areas with unemployment rates (for the three most recent consecutive months) in excess of the national unemployment rate; and the remaining thirty percent (30%) was reserved for projects from areas with unemployment rates equal to or less than the national unemployment rate.² 42 U.S.C.A. § 6707(c), (d).

Plaintiff, the City of Benton Harbor, challenged the Economic Development Administration's (EDA) treatment of plaintiff's grant application under the above Act. This Court has previously denied plaintiff's application for a temporary restraining order on January 14, 1977, and has set the matter down for a prompt hearing on plaintiff's motion for a preliminary injunction. The requested injunction sought to restrain the defendants from

"disbursing any of the funds to the cities listed on Exhibit (sic) as being qualified in the `70% area' until . . . final hearing can be had on the above matter; . . . or in the alternative that this Court determine and declare that plaintiff is a qualified applicant insofar as that term now applies to all other applicants appearing on Exhibit (sic); and find as a matter of fact and law that defendants therefore should be directed, ordered, and compelled to include plaintiff among those applicants so qualified, and to administer the provisions of the Act so as to insure fair and equal treatment to plaintiff along with all other such applicants . . .."

The hearing was held on January 24, 1977, after briefs had been filed by both sides. Upon consideration of the pleadings, briefs and oral arguments of counsel for all parties, and for the reasons set forth below, the Court concludes that it must deny plaintiff's motion for preliminary injunctive relief.

The enactment in issue here has a twofold purpose: "(1) to alleviate the problem of national unemployment, and (2) to stimulate the national economy by assisting State and local governments build badly needed public facilities." H.R.Rep. No. 94-1077, 94th Cong., 2d Sess. 2, 1976, U.S. Code Cong. & Ad. News, pp. 1746, 1747.³ Several provisions⁴ were included which were designed to affect the perceived unemployment problem quickly by "avoiding the long lag time sometimes associated with public works programs." H.R.Rep. No. 94-1077, supra, at 3, 1976 U.S. Code Cong. & Ad. News, p. 1748.⁵

The statute directed the administrative agency, during its processing and selecting grant applications, to

"consider among other factors (1) the severity and duration of unemployment in proposed project areas, (2) the income levels and extent of underemployment in proposed project area, and (3) the extent to which proposed projects will contribute to the reduction of unemployment." 42 U.S.C.A. § 6706.

Applicants were asked to relate their application projects to existing approved plans and programs of a local community or regional development nature, and, where feasible, to longer range plans and programs. 42 U.S.C.A. § 6707(g).

In order to implement these Congressional directions, EDA developed a project selection procedure. 13 C.F.R. § 316.10(a) as amended, 41 Fed.Reg. 46422 (October 20, 1976). Initially there was a scoring and ranking process, involving a formula designed to take account of the above-mentioned factors. A project's basic rank was determined using four factors: (1) number of unemployed workers in the project area (30%); (2) unemployment rate prevailing in the project area (25%); (3) labor intensity on a cost basis (30%); and (4) level of income prevailing in the project area (15%). 13 C.F.R. § 316.10(a)(2)(i)(A)-(D), 41 Fed. Reg. 46422. This basic rank was subject to increase by certain "bonus" factors: (1) potential for providing long-term benefits (up to 10%); (2) sponsored by a general purpose unit of local government (5%); (3) sponsored by special purpose unit of local government or a political subdivision of a State (3%); and (4) relates to existing approved plans and programs of a local community or regional development nature or promotes or advances longer range plans and programs (5%). 13 C.F.R. § 316.10(a)(2)(ii)(A)-(D), 41 Fed.Reg. 46422. Fund allocations were made on a state-by-state basis (13 C.F.R. § 316.8(b), (c), 41 Fed.Reg. 46421), and projects were assessed against others from the same priority category (70% or 30%) in the same state. 13 C.F.R. § 316.10(a)(3)(i), (ii), 41 Fed.Reg. 46422. Project selection was accomplished by giving primary consideration to final rankings, but EDA could approve projects ranking below others in order to avoid an undue geographic concentration of program assistance in any particular area or areas of a State or to meet the required distribution of program resources between the statutorily mandated priority classes or when the sum of the total project labor requirements in a project area exceeded the available labor. 13 C.F.R. § 316.10(a)(3)(iii), 41 Fed. Reg. 46422.

Plaintiff, City of Benton Harbor, submitted three project applications⁶ to the EDA Regional Office in Chicago. None of plaintiff's applications appeared in the list of projects selected for final processing. 41 Fed.Reg. 56146-56172 (December 23, 1976). All applications not included in this list were denied. Benton Harbor claims that the majority, if not all, of the applicants deemed "qualified" appearing on this list reported lower percentage of employment, a smaller number of unemployed workers, a higher ratio of total project costs to the total number of person-months of employment,⁷ and a higher level of income in the project area than itself. Plaintiff further claims that very few, if any, of the projects deemed "qualified" had greater potential for providing long-term benefits or any greater relationship to existing approved plans of a local community or regional development nature or a greater ability to advance longer range plans and programs. Thus, in essence, plaintiff contends that it was more "deserving" of a grant than others, including the one Berrien County project that was selected (Lake Michigan College District Cultural, Civic and Convention Center), and that its failure to be selected was "arbitrary, capricious, abusive of discretion, and discriminatory."

At the current stage of this case where preliminary injunctive relief is sought, a court must analyze the situation in terms of four well-settled factors: (1) whether plaintiff will be irreparably harmed absent relief, (2) whether plaintiff has shown a substantial likelihood of success on the merits, (3) whether the harm to the plaintiff significantly outweighs any injury to the defendant or other interested parties, and (4) whether the public interest would be served by issuing the injunction. See S.E.C. v. Senex Corp., 534 F.2d 1240 (6th Cir. 1976); Garlock, Inc. v. United Seal, Inc., 404 F.2d 256 (6th Cir. 1968); Virginia Petroleum Jobbers Ass'n v. Federal Power Commission, 104 U.S.App.D.C. 106, 259 F.2d 921 (1958); Burkett v. Tuslaw Local School District Board of Education, 380 F.Supp. 812 (N.D.Ohio 1974); 7 Moore's Federal Practice ¶ 65.041.

Plaintiff claims irreparable injury "to the extent that it would be unable to participate in this program although it is fully and adequately qualified under the established law and regulation." It contends that this injury is irreparable because the funds appropriated for the Act will shortly be completely expended.⁸ "Irreparable injury" is one of the elusive legal terms of art defying reduction to a mere black-letter definition. Although courts have characterized "irreparable injury" as injury that is "both certain and great," see, e. g. Merrill Lynch, Pierce, Fenner & Smith, Inc. v. E. F. Hutton & Co., 403 F.Supp. 336 (E.D.Mich.1975), citing Washington Capitols Basketball Club Inc. v. Barry, 304 F.Supp. 1193 (N.D.Cal.), aff'd 419 F.2d 472 (9th Cir. 1969); West Coast Construction Co. v. Oceano Sanitary District, 311 F.Supp. 378 (N.D. Cal.1970), this characterization does not appreciably simplify the determination whether irreparable harm exists. In the Court's view, the harm to itself which plaintiff is claiming is only secondary in the circumstances of this case. The City has mainly argued that it will be deprived of the actual projects for which it sought federal funding. However, the overriding purpose of the legislation was to reduce unemployment, not to construct particular projects in particular areas. One project (with a value of $5.29 million) in the 70% category from Berrien County (in which plaintiff is located and from which it would draw its labor force) has been selected subject to final clearance.

In light of the unique statutory purposes, no one particular grant applicant...